Common Interest and Signaling Games: A Dynamic Analysis

Abstract

We present a dynamic model of the evolution of communication in a Lewis signaling game while systematically varying the degree of common interest between sender and receiver. We show that the level of common interest between sender and receiver is strongly predictive of the amount of information transferred between them. We also discuss a set of rare but interesting cases in which common interest is almost entirely absent, yet substantial information transfer persists in a “cheap talk” regime, and offer a diagnosis of how this may arise.